Report: Value of Online Ads Underappreciated

By Keith Regan
Jun 25, 2001 4:13 PM PT

E-commerce firms, among others, have yet to grasp
the full value of Internet advertising because many do not
recognize the overall impact that online branding can have,
according to a report released Monday by
Jupiter Media Metrix (Nasdaq: JMXI).

Businesses that judge advertising campaigns solely on their
ability to generate visits to Web sites, or on how
many visitors are converted into buyers,
do not measure all of the benefits of online ads, the New
York-based market research firm said.

In fact, Jupiter said, the return on investment for online
advertising may be as much as 35 percent higher than generally believed.

"The actual number of customers driven to Web sites
by online advertising is greatly underestimated by
traditional click-rate metrics," said Jupiter analyst Rudy Grahn.

Measure by Measure

Currently, about 15 percent of all online ad campaigns are
measured based on how effectively they help extend a brand, according to Jupiter.
In contrast, 60 percent of all digital advertisers track direct
responses, such as click-through rates, and 75 percent of all
campaigns measure cost-per-customer conversion.

Traffic Factors

The study said that online advertising contributes 17
percent of the traffic to a Web site, while other factors
such as seasonality and growing Internet use play significant roles as well.

Jupiter said that there are a few effective ways to measure
how well an online branding campaign is working, and that
new techniques are gaining traction.

One complicating factor is the Web's fractured nature. Jupiter noted
that while Yahoo! (Nasdaq: YHOO)
is seen as a way to reach a mass Internet audience, many
of its 20 million users at peak hours are spread across as many as 438
different domains, such as sports or finance. The fact that a Yahoo! is divided into
so many different channels makes it difficult to translate
offline marketing
practices to the Web.

Debate Underway

The Jupiter study comes amid a
roiling debate over the direction of Internet ads.

For example, camera and electronics site
X10.com recently propelled itself
into the upper echelon of Web traffic rankings by using pop-under and
pop-up ads that even count surfers who only view the ad box as visitors to the site.

Analysts have questioned
whether that type of traffic actually generates sales for a company or
translates into people learning about the brand or experiencing a company's Web site.

Additionally, a recent report from the Yankee Group predicted that growing broadband
access will mean more use of streaming audio and
video in advertising in coming year.